California Observer

Global Food Prices Fell, but Uncertain Bill Persists

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For the third consecutive month, food prices continued to increase abated in June, although any gains are unlikely to be felt by consumers’ grocery bills until later this year.

According to the most recent United Nations Food and Price Index, the price of major wholesale food commodities fell by 2.3 percent in June compared to May.

As they dropped from their highs brought on by the Russia-Ukraine war, the prices of cereals and edible oils increased.

However, overall prices are still 23% more expensive than they were in June 2021.

The UN Food Price Index keeps tabs on the most popular food commodities sold around the world by calculating the average cost of grains, vegetable oil, dairy, meat, and sugar.

Weather-related concerns, high global demand, and growing production and transportation costs have all contributed to price increases.

Maximo Torero Cullen, chief economist for the Food and Agriculture Organization, stated that “the dynamics that first drove world prices high are still at play.”

According to the most recent data, last month saw a 4 percent decrease in cereal costs and a 7.6 percent decrease in edible oil prices due to the availability of substitutes and improved harvests elsewhere. While dairy and meat prices continued to grow, the price of sugar also decreased.

One of the factors driving higher costs at supermarket checkouts is the growth in the price of food commodities on a worldwide scale. As a result, inflation in the UK increased to a 40-year high of 9.1% in the year ending in May.

Recently, the Bank of England raised UK interest rates from 1% to 1.25% in an effort to slow the rate of price increases.

Due to the pandemic’s disruption, food prices were already on the rise by the beginning of 2022. As a result of Russia’s invasion of Ukraine, however, they rose to levels that strained budgets and brought hardship to parts of the world that had never seen it before.

Only 2% of the world’s trade is conducted between Russia and Ukraine, but due to their importance as major producers of essentials like grain, sunflower oil, and fertilizer, this battle is felt on dinner plates thousands of miles away. Oil and cereal prices fell in recent months, but as alternative sources of supply strengthened, prices across all commodity groups increased by 23% from a year ago. In the short run, households will suffer more because it will take around six months until wholesale costs are reflected on store shelves. Also, even when they are at their lowest, the prices of these goods are hard to predict, so more surprises may be on the way.

According to the UN, since the start of COVID-19, there have been 150 million extra people affected by hunger, and the war may add as many as 40 million to that number. Even if food prices stop going up, economists say it’s unlikely that we’ll go back to a time when food was cheaper.

Last month, the head of the World Trade Organization warned that the conflict in Ukraine could cause a food crisis that could last for years.

Ngozi Okonjo-Iweala, the director general of the WTO, told the BBC that because Ukraine is a significant global wheat exporter and accounts for 9% of the global market, African nations may be particularly badly hit by shortages of wheat and fertilizer. In addition, it produces 16% of the world’s maize and a massive 42% of the world’s sunflower oil.

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